Tax Benefits

For 2010, if you have HDHP coverage only for yourself, you can contribute up to $3,050. If you have family HDHP coverage you can contribute up to $6,150.

Any contributions made to your HSA must be cash; contributions of stock or property are not allowed. Also, you cannot make any contributions to your HSA when you enroll in Medicare. However, you can keep the money in your HSA and use it to pay for medical expenses tax-free.

Tax Benefits
According to the Internal Revenue Service (IRS), HSAs have the following tax-related advantages:
You can claim a tax deduction for contributions you or someone other than your employer, make to your HSA.
Contributions to your HSA made by your employer may be excluded from your gross income.
Any interest or other earnings you make on the money in your HSA are tax free.
Money that you take out of your HSA may be tax free if you pay “qualified” medical expenses.

You can find details about the tax benefits and rules (including examples of how HSAs work) in IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.